Correlation Between BlackRock Intermediate and SPDR Nuveen

Can any of the company-specific risk be diversified away by investing in both BlackRock Intermediate and SPDR Nuveen at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BlackRock Intermediate and SPDR Nuveen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock Intermediate Muni and SPDR Nuveen Municipal, you can compare the effects of market volatilities on BlackRock Intermediate and SPDR Nuveen and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BlackRock Intermediate with a short position of SPDR Nuveen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Intermediate and SPDR Nuveen.

Diversification Opportunities for BlackRock Intermediate and SPDR Nuveen

0.88

Correlation Coefficient

BlackRock Intermediate  SPDR Nuveen

Very poor diversification

The 3 months correlation between BlackRock and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Intermediate Muni and SPDR Nuveen Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Nuveen Municipal and BlackRock Intermediate is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BlackRock Intermediate Muni are associated (or correlated) with SPDR Nuveen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Nuveen Municipal has no effect on the direction of BlackRock Intermediate i.e., BlackRock Intermediate and SPDR Nuveen go up and down completely randomly.

Pair Corralation between BlackRock Intermediate and SPDR Nuveen

Given the investment horizon of 90 days BlackRock Intermediate is expected to generate 1.0 times less return on investment than SPDR Nuveen. In addition to that, BlackRock Intermediate is 1.09 times more volatile than SPDR Nuveen Municipal. It trades about 0.12 of its total potential returns per unit of risk. SPDR Nuveen Municipal is currently generating about 0.13 per unit of volatility. If you would invest  2,523  in SPDR Nuveen Municipal on October 5, 2024 and sell it today you would earn a total of  235.00  from holding SPDR Nuveen Municipal or generate 9.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BlackRock Intermediate Muni  vs.  SPDR Nuveen Municipal

BlackRock Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Intermediate Muni has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BlackRock Intermediate is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR Nuveen Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Nuveen Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPDR Nuveen is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock Intermediate and SPDR Nuveen

The main advantage of trading using opposite BlackRock Intermediate and SPDR Nuveen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Intermediate position performs unexpectedly, SPDR Nuveen can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SPDR Nuveen will offset losses from the drop in SPDR Nuveen's long position.

The idea behind BlackRock Intermediate Muni and SPDR Nuveen Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.